non-residential and residential construction

5% and 2% for non-residential and residential construction.
But is it true those construction expenditure has spill-over effect, like building a new home leads many other works (wood, concrete, ...) and buying a new home leads buying furniture, appliance, landscaping, etc?

How how big is the spill-over effect quantitatively?

in reference to:

"Dollar-wise, non-residential construction is about 5% of GDP, residential only about 2%. So the even if residential recovers somewhat, a dropping non-residential will be a net drag on the economy."
- Construction Spending increases in August | Hoocoodanode? (view on Google Sidewiki)

Fallacy of non-relative

Angry Saver (profile) wrote on Thu, 10/1/2009 - 11:10 am

Nothing that BB or Timmay does enters into my reality as it's total BS. This is about real business' and people like you and me who simply have no alternative but to


default and add it into the pile

MS,

I missed your initial point. But what your saying makes sense to me. And the data bears your theory out. Private lending contracted in Q2 by > $1 trillion. And Bank credit is lower today than a year ago. So much for the TARP being used to extend credit to small businesses and consumers. That was a such an obvious ruse. But, as usual, it was enough for CONgress.
^^^ The effect of using TARP should be compared with bank-credit shrink/expansion with no TARP. The absolute change (shrink 1T$ in this case) not indicative since it might be a shrinking 5T$ should there was not TARP provisioned.

in reference to:

"Angry Saver (profile) wrote on Thu, 10/1/2009 - 11:10 am


reply
Ignore user



Nothing that BB or Timmay does enters into my reality as it's total BS. This is about real business' and people like you and me who simply have no alternative but to default and add it into the pile
MS,
I missed your initial point. But what your saying makes sense to me. And the data bears your theory out. Private lending contracted in Q2 by > $1 trillion. And Bank credit is lower today than a year ago. So much for the TARP being used to extend credit to small businesses and consumers. That was a such an obvious ruse. But, as usual, it was enough for CONgress."
- Ford reports U.S. Sept. sales fall 5.1% | Hoocoodanode? (view on Google Sidewiki)

Good data/statistics about economy

http://online.wsj.com/mdc/public/page/2_3022-autosales.html

in reference to: Auto Sales - Markets Data Center - WSJ.com (view on Google Sidewiki)

Jesse Livermore's trading rule as understood by Cory Mitchell

Born in 1877, Jesse Livermore is one of the greatest traders that few people know about. While a book on his life written by Edwin Lefèvre, "Reminiscences of a Stock Operator" (1923), is highly regarded as a must-read for all traders, it deserves more than a passing recommendation. Livermore, who is the author of "How to Trade in Stocks"(1940), was one of the greatest traders of all time. At his peak in 1929, Jesse Livermore was worth $100 million, which in today's dollars roughly equates to $1.5-13 billion, depending on the index used.

The enormity of his success becomes even more staggering when considering that he traded on his own, using his own funds, his own system, and not trading anyone else's capital in conjunction. There is no question that times have changed since Mr. Livermore traded stocks and commodities. Markets were thinly traded, compared to today, and the moves volatile. Jesse speaks of sliding major stocks multiple points with the purchase or sale of 1,000 shares. And yet, despite the difference in the markets, such automation increased liquidity, technology, regulation and a host of other factors that still drive the markets today.

The Test of Time
Given that this trader's rules still apply, and the price patterns he looked for are still very relevant today, we will look at a summary of the patterns Jesse traded, as well his timing indicators and trading rules.

Price Patterns
Jesse did not have the convenience of modern-day charts to graph his price patterns. Instead, the patterns were simply prices that he kept track of in a ledger. He only liked trading in stocks that were moving in a trend, and avoided ranging markets. When prices approached a pivotal point, he waited to see how they reacted.

For instance, if a stock made a $50 low, bounced up to $60 and was now heading back down to $50, Jesse's rules stipulated waiting until the pivotal point was in play in order to trade. If that same stock moved to $48, he would enter a trade on the short side. If it bounced up off the $50 level, he would enter long at $52, closely watching the $60 level, which is also a "pivotal point." A rise above $60 would trigger an addition to the position (pyramiding) at $63, for example. Failure to penetrate or hold above $60 would result in a liquidation of the long positions. The $2 buffer on the breakout in this example is not exact; the buffer will differ based on stock price and volatility. We want a buffer between actual breakout and entry that allows us to get into the move early, but will result in fewer false breakouts.

While Jesse did not trade ranges, he did trade breakouts from ranging markets. He used a similar strategy as above, entering on a new high or low but using a buffer to reduce the likelihood of false breakouts.

Price patterns, combined with volume analysis, were also used to determine if the trade would be kept open. Some of the criteria Jesse used to determine if he was in the right position were:

* Increased volume on breakout.
* The first few days after the break prices should move in the breakout direction
* A normal reaction occurs where prices retrace somewhat against the trend, but volume is lower on retracements than it was in the trending direction.
* As the normal reaction ends, volume increases once again in the direction of the trend.

Deviations from these patterns were warning signals and, if confirmed by price movements back through pivotal points, indicated that exited or unrealized profits should be taken.

Timing the Market
Any trader knows that being right a little too early or a little too late can be as detrimental as simply being wrong. Timing is crucial in the financial markets, and nothing provides better timing than price itself. The pivotal points mentioned above occur in individual stocks and market indexes, as well. Let price confirm the trade before entering large positions.

Jesse Livermore believed no matter how much we "feel" that we know what is happening, we need to wait for the market to confirm our thesis. And only when it does do we make

in reference to:

"Born in 1877, Jesse Livermore is one of the greatest traders that few people know about. While a book on his life written by Edwin Lefèvre, "Reminiscences of a Stock Operator" (1923), is highly regarded as a must-read for all traders, it deserves more than a passing recommendation. Livermore, who is the author of "How to Trade in Stocks"(1940), was one of the greatest traders of all time. At his peak in 1929, Jesse Livermore was worth $100 million, which in today's dollars roughly equates to $1.5-13 billion, depending on the index used.










The enormity of his success becomes even more staggering when considering that he traded on his own, using his own funds, his own system, and not trading anyone else's capital in conjunction. There is no question that times have changed since Mr. Livermore traded stocks and commodities. Markets were thinly traded, compared to today, and the moves volatile. Jesse speaks of sliding major stocks multiple points with the purchase or sale of 1,000 shares. And yet, despite the difference in the markets, such automation increased liquidity, technology, regulation and a host of other factors that still drive the markets today.The Test of TimeGiven that this trader's rules still apply, and the price patterns he looked for are still very relevant today, we will look at a summary of the patterns Jesse traded, as well his timing indicators and trading rules. Price PatternsJesse did not have the convenience of modern-day charts to graph his price patterns. Instead, the patterns were simply prices that he kept track of in a ledger. He only liked trading in stocks that were moving in a trend, and avoided ranging markets. When prices approached a pivotal point, he waited to see how they reacted.For instance, if a stock made a $50 low, bounced up to $60 and was now heading back down to $50, Jesse's rules stipulated waiting until the pivotal point was in play in order to trade. If that same stock moved to $48, he would enter a trade on the short side. If it bounced up off the $50 level, he would enter long at $52, closely watching the $60 level, which is also a "pivotal point." A rise above $60 would trigger an addition to the position (pyramiding) at $63, for example. Failure to penetrate or hold above $60 would result in a liquidation of the long positions. The $2 buffer on the breakout in this example is not exact; the buffer will differ based on stock price and volatility. We want a buffer between actual breakout and entry that allows us to get into the move early, but will result in fewer false breakouts.While Jesse did not trade ranges, he did trade breakouts from ranging markets. He used a similar strategy as above, entering on a new high or low but using a buffer to reduce the likelihood of false breakouts. Price patterns, combined with volume analysis, were also used to determine if the trade would be kept open. Some of the criteria Jesse used to determine if he was in the right position were:

Increased volume on breakout.
The first few days after the break prices should move in the breakout direction
A normal reaction occurs where prices retrace somewhat against the trend, but volume is lower on retracements than it was in the trending direction.
As the normal reaction ends, volume increases once again in the direction of the trend.

Deviations from these patterns were warning signals and, if confirmed by price movements back through pivotal points, indicated that exited or unrealized profits should be taken. Timing the Market Any trader knows that being right a little too early or a little too late can be as detrimental as simply being wrong. Timing is crucial in the financial markets, and nothing provides better timing than price itself. The pivotal points mentioned above occur in individual stocks and market indexes, as well. Let price confirm the trade before entering large positions.Jesse Livermore believed no matter how much we "feel" that we know what is happening, we need to wait for the market to confirm our thesis. And only when it does do we make our trades - and we must do so promptly. Trading RulesThe trading rules that follow are simple, and have been included in many trading plans by many traders since they were created nearly a century ago. They are still valid today, and were created under Jesse's truism: "There is nothing new in Wall Street. There can't be, because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."

Trade with the trend. Buy in a bull market, short in a bear market.
Don't trade when there aren't clear opportunities.
Trade using the pivotal points.
Wait for the market to confirm opinion before entering. Patience leads to "the big money."
Let profits run. Close trades that show a loss (good trades generally show profit right away).
Trade with a stop, and know it before you enter.
Exit trades where the prospect of further profits is remote (trend is over or waning).
Trade the leading stocks in each sector; trade the strongest stocks in a bull market, or the weakest stocks in a bear market.
Don't average down a losing position.
Don't meet a margin call; close the position instead.
Don't follow too many stocks.

Summing Up Jesse Livermore's StrategyJesse was highly successful, but also lost his fortune several times. He was always the first to admit when he made a mistake, and when he lost money it came down to two potential culprits:

The rules for trading were not fully formulated (not the case for most of his losses).
The rules were not followed.

For today's trader, these are still likely the culprits that keep profits at bay. To be profitable, we must actually create a profitable trading system, and then we must adhere to it in actual trading. Jesse outlined a simple trading system for us: wait for pivotal points before entering a trade. When the points come into play, trade them using a buffer, trading in the direction of the overall market. Let the price dictate our actions and stay with profitable trades, until there is good reason to exit the trade. Losses should be small and trading should be avoided when there are no clear opportunities. When there are trading opportunities, trade stocks that are most likely to move the most."
- Jesse Livermore: Lessons From A Legendary Trader - Yahoo! Finance (view on Google Sidewiki)

Disucssion on FDIC examiners to banks

Terry says:
[message/possible fact/rumor]Talking to bankers, the examiners continue to press for more "mark-to-market" on loans that the banks intend to hold to maturity, for a capital level of about 12% TCE (not Tier 1), and for a big cash kick-in to the FDIC to fund the DIF.[His own or his friends' view?] Only ways to get there are to raise more capital, sell assets or to cut credit, including consumer, commercial and construction. There is going to be no one left to fund conusmer purchases, inventory purchases and capex expenditures.

Basel Too says:
Several community banks down here recently announced suspension of dividends. Another bank raised capital for "FDIC-funded expansion"...

Terry replies:
That works, too, but does not lead to a willingness of investors to put up more capital. Also, this is a frequent item addresses in the non-public MOUs with the regulators - wonder how many of these banks are under MOUs that may ripen to C&Ds?

some investor guy replies to Terry's "Only ways to .."
Terry, it's not just banks that can fund these things. People can pay cash. They can sometimes borrow from nonbanks (has anyone seen VC or PE lately?). There is this new/oldfangled thing called lay a way. I wouldn't be terribly surprised to see more barter.

Terry replies:

Regarding an earlier post on replacing bank lending with PE/VC money - not easily done for many industries, as the PE/VC wants to know the exit strategy, be it a sale or public offering. Valuations are also important.

Even for VC/PE funded companies, my contacts have said that they are being less free with giving additional funding to portfolio companies - they want the insiders to be squeezed first.

For many businesses, the VC/PE window is closed.

in reference to: Chicago Purchasing Managers Index Declines in September | Hoocoodanode? (view on Google Sidewiki)

layoff catch up

Citizen AllenM reporting "management shakeup has started".

sartre reports:

Palm is laying-off

somewhat OT but interesting post about Palm:
Pre faltering, Palm laying off employees? – UPDATES

in reference to: Survey: Home Purchase Market by Homebuyer Category | Hoocoodanode? (view on Google Sidewiki)

Good critical thinking example by Dan Duncan

1. Check the facts
2. No TA analysis without thorough historical view AND clear fundamental explanation

Full text:

Full text:
“Indeed, rather than investigating these common aphorisms, if you trade on them at face value, you will be disappointed. Unless you thoroughly data verify and prove/disprove ANY AND ALL Wall Street myths, rules of thumb, or standard trading phrases, you are going to a) develop a false belief system and 2) that will eventually lose you lots of money.”

Barry, you’re just as guilty when you throw out the standard technical analysis B.S. with no underpinnings. Hell, just last week you were noting the significance of the dreaded “outside down day”…Oh no!

Taking the Dreaded Outside Down day as an example (one of many—like Head shoulders, MA crossovers and on and on.)–and your time-tested advice to “data verify”…

Just what exactly is the significance of the Outside Down Day? [And please, no garbage narratives...just the facts.]

1. How often are outside days (up or down) followed up by a move in the same direction? Could you give us a little feedback on this…you are a part of Fusion IQ, after all, so it couldn’t be too difficult.

2. Would the results of #1 be affected by the enactment of a reasonable stop-loss plan? [It is so damn annoying when people make market calls and then take credit for a particular call even the trade would have been stopped out by a normal enforcement of a stop loss protocol.]

3. Any ideas as to how long the affects of the Outside day will last on a particular market movement..ie should the trader stay in trade for 1 day or should the occurrence of an outside day mark the beginning of a long term trade?

4. If you don’t know the answer to #1 (let alone 2-4), why on earth are you mentioning the occurrence of an outside day as if it has any significance whatsoever? If you do know the answer, wouldn’t your readers find it interesting?

5. Finally, and most importantly: Are you impressed by my willingness and desire to “thoroughly data verify and prove/disprove ANY AND ALL Wall Street myths, rules of thumb, or standard trading phrases”?

in reference to: The Myth of Sideline Cash | The Big Picture (view on Google Sidewiki)

Off-balance sheet accounting

Off-balance sheet exposures have to be brought back on the balance sheet from 1/1/2010 (FAS 166 and FAS 167)

Japan export 12% of GDP

US only 6%

in reference to: Yen Rises to 8-Month High on Speculation Japan Won’t Intervene - Bloomberg.com (view on Google Sidewiki)

Lots of (good?) fund statistics here for free

According to its data, total money market fund
1. Curent (09/23/2009) : 3.482T

Context:
1. Market high vs low
* 01/14/2009: 3.920T
* 03/11/2009: 3.904T

Remember the "cash-on-the-side-line falacy"

in reference to: ICI (view on Google Sidewiki)

Mark-to-Market does not impede banks forclosing houses

Per Chuck Ponzi:
Jace,

I’m wholly aware of the changes to MTM, which have little to do with bank processing REOs. Unfortunatly you must have heard this from someone else or read the FASB statement incorrectly, or misunderstand the interplay between banks, regulators, and accounting pronouncements. Luckily, Economics is not my forte’, as my undergrad is accounting with an MBA.

Let’s do a banking 101:

1. Accounting realization has little to do with captitalization requirements. Indeed, one can regonize losses on accounting without impinging on capitalization requirements. FASB governs recognition on Financial Statements only. Most banks maintain several asset ledgers, and accrue for asset non-performance without individual write-downs. This is the essence of MTM.

2. Capitalization requirements are set by banking regulators (FDIC), not by FASB. Write-offs do not directly impair individual assets (which are reviewed by banking regulators).

3. MTM has previously only applied to “held for trade” securities, and not for “held to maturity”. The new rules are largely the same as the old rules; unless the bank is actually trading the loans as securities, mark to market accounting is irrelevant. Individual assets are not impaired until substantial doubt arises that the value has declined when it comes to held-to-maturity loans. Most Alt-A and Option Arm loans are not securitized so MTM does not apply. This is why Golden West and Wells Fargo are able to largely avoid write-downs despite having significant recognized/unrealized revenue assets that made their balance sheets look great. However, regulators only concern themselves with performing/nonperforming assets in computing capitalization. The world could be going to hell in a handbasket and the company could be underreserving and as long as the bank had performing assets, the regulators could do nothing.

You’re actually incorrect on your assumption that the 600M “loss” showed up on the books because under MTM, only tier 1 assets were completely marked to market. Hence, we saw Lehman Brothers (not a bank) implode while Wells Fargo and Citibank did not (banks). Banks don’t go bankrupt, they go insolvent. Companies do not go insolvent, they go bankrupt. There’s a subtle but key difference. Insolvency is determined by banking regulators, bankruptcy is petitioned for by the company when its debts exceed its assets.

I’m not meaning to be rude, but your view is the 100K foot view without understanding the basics of how the system works. I’ll break it down simply:

We’ll assume that a bank is insolvent. That is determined by nonperforming assets vs. capitalization ratios and a whole lot of assumptions. Indeed, Wamu had shown huge amounts of income on Option-Arms prior to being deemed insolvent, though one could argue that the FASB treatment of accrued interest on Neg-am products is less than spectacular and I would agree. (I’d rather see corresponding liability or contra-asset booked than revenue, but I digress).

So, regulators see non-performing assets an(d?) order the bank to foreclose and sell those non performing assets. (adhering to applicable laws and moratoria). However, the FDIC has been charged to forestall foreclosures (thanks, Sheila!) and local moratoria in California have largely hampered the ability of the regulator to force the bank to foreclose and liquidate. Contrary to popular belief, banks cannot “sit on inventory” because the regulator would normally not let them do that unless their boss (Sheila) told them to. Largely, though, the delay in processing foreclosures has largely been because of inept management and poorly prepared staff. Just ask someone who has gone through a short sale!

So, in short… you said I was wrong, when in fact I am exactly correct in the basis of the model (admittedly there are some unknowns that I pulled out above, and there might be more), but Mark to Market and Capitalization Requirements are reason for MORE foreclosures, not less.

Chuck Ponzi

in reference to:

"Jace,
...
Chuck Ponzi"
- bubbleinfo.com » Blog Archive » Poll: Will There Be A Flood? (view on Google Sidewiki)

FDIC tight the screw on CRE?

Bond Girl:
"Not sure how true this is, but a banking acquaintance said that the FDIC is trying to get banks to change their valuation on some performing loans (he wasn't specific, but it was in the context of a discussion on CRE) to be more conservative. Says banks are pretty upset about it."

Terry:
"A loan may be performing but still have a significant risk of impairment - true, banks did not have to revalue a loan until it defaulted, but this mark to market move is happening."

jasap:
"Friend of mine is a community bank director. She said they are trying to force them to mark to market all the CRE loans. Which will put them under."

More evidence:

http://www.fincriadvisor.com/2009-09-27/CREconcentrations

http://www.costar.com/News/Article.aspx?id=67A183B2278C8088B2C11F65A68C3284

in reference to: Freddie Exec Compensation, Bandos, Market and more | Hoocoodanode? (view on Google Sidewiki)

#unemployed per job openings

1. 2.4M full-time permanent jobs were open
2. 14.5M people officially unemployed
3. Ratio = 14.5/2.4 = 6.04
4. Unemployment (U3): 9.7%

Context:
1. Ratio highest since the government began tracking open positions in 2000
2. 2001 recession worst: 2:1
3. Early 2009: 4:1

**Job opening decline since the end of 2008
1. 47% manufacturing
2. 37% in construction (large drop should have happened already by the end of 2008)
3. 22% retail
4. 21% in education and health services
5. 17% in government

Job opening decline since Dec 2007 (begining of this recession)
1 .45 percent in the West and the South
2. 36 percent in the Midwest
3. 23 percent in the Northeast.

in reference to:

"Linux"
- Read it here 1st: Truest Picture of Excess Labor Supply | The Big Picture (view on Google Sidewiki)

DL

DL Says:
April 16th, 2009 at 2:36 pm

If we get another panic sell-off in the stock market, the dollar should rally. But after that, USD is toast.

DL Says:
April 16th, 2009 at 3:39 pm

When Mannwich finally liquidates all his shorts, the market’s going to drop 20% in a week.

DL Says:
April 16th, 2009 at 8:48 pm

Leftback @ 8:08

“…if you had a complex play on - something like a bet that the SPX would be between 600 and 700, for example and then the market rallied far out of that range..”

I don’t think one could do this with options… potential for profit using a “spread” or a “butterfly” only exists for a fairly narrow trading range.

………..

However, if someone kept shorting naked calls all the way up, he’d be forced to buy them back. If a lot of people were doing that, it would increase call option premiums… that in turn might entice arbitrageurs to come in and simultaneously buy the underlying stock and short the calls against them.

In any case, I don’t really think this is driving the rally.

karen

karen Says:
April 16th, 2009 at 3:25 pm

thanks, andy, could not agree more… it’s more fun betting with you than against you, btw.

cjcpa

cjcpa Says:
April 16th, 2009 at 3:22 pm

Q: Is it courageous or silly to get short here?

A: we’ll know in six months for sure….

Andy Tabbo

Andy Tabbo Says:
April 16th, 2009 at 3:21 pm

Quick Note as I leave town for a few days. Last Sunday night I wrote about 870 - 906 being an important zone of resistance and that we should see that level by end of this week/early next week. Well, we’re almost there (high print is 869.17 so far). Longs should think hard about shedding some length very soon. To be honest, I’m not sure what the pattern is from the 666 lows–It’s a little confusing to me. But, what I can state is that the last few weeks are beginning to resemble a “rising wedge” formation, which is potentially very bearish. One thing is for certain, pay attention to that uptrend line. If it gets violated at all, then exit the market post-haste. When rising wedges get broken to the downside, they have a tendency of producing VIOLENT moves lower.

I can’t recommend massive short positions just yet, because I’d rather see some “peaking” action first…either an identifiable little 5 wave move down on intraday charts, or a break of that uptrend line.

MRegan

MRegan Says:
April 16th, 2009 at 3:08 pm

Is QID coming into buy territory?

sentiment

Mannwich Says:
April 16th, 2009 at 4:03 pm

Raised more cash into the close as well to load up more shorts if this nonsense continues. Liquidated some long positions that I wanted out of. Now mostly short by quite a bit and feeling like crap about, so it must be good. Now off for my first road bike ride of the season! 73 and gorgeous here in the hinterlands…..

Mannwich Says:
April 16th, 2009 at 5:57 pm

Bingo. GOOG = buy the rumor, sell the news. This next leg down is going to be even more entertaining to watch the pundits look like fools AGAIN.

Mannwich Says:
April 16th, 2009 at 6:56 pm

@Mike in Nola: I would argue that this confidence game isn’t designed to replace jobs. It’s designed to pump up profits for the lucky insiders who are in the know so they can be made whole while they kick the can down the road. And then we’ll hear how we’re right on the cusp of turning the corner time and time again and “things aren’t really that bad” in comparison to other times (which is somewhat true) but tell that to the unemployed, levered up, and with no prospects on the horizon outside of a job at MCD. Collateral damage.

Mannwich Says:
April 16th, 2009 at 8:20 pm

On another note, this would obviously be bad for the O administration if there’s anything to this…..is there anyone in positions of power with clean hands? I think not. I honestly think there would be endless perp walks if they truly started peeling the onion. That’s why it’s not going to happen.

http://online.wsj.com/article/SB123992516941227309.html#mod=djemalertNEWS

sentiment

Mannwich Says:
April 16th, 2009 at 2:53 pm

Wow, look at the steady march upwards today. It seems the all-clear has been given to Joe/Jane Retail to either get back in or stay in because all is well again. Slow and steady over the past hour or so. Final hour should be interesting? Panic buying, anyone?

Mannwich Says:
April 16th, 2009 at 3:23 pm

Yes, it is. I’m speechless but will raise cash and patiently wait out this charade. I’d be far less irritated by this if things WERE actually improving, but I just don’t see it. This is pump & dump 101, with a major assist from the feds. Question is - when does the pump cease and the dump begin?

DL Says:
April 16th, 2009 at 3:39 pm

When Mannwich finally liquidates all his shorts, the market’s going to drop 20% in a week.

Mannwich Says:
April 16th, 2009 at 3:43 pm

@DL: Not liquidating. Hanging in there like Steve Barry. We are not out of the woods yet.

Mannwich Says:
April 16th, 2009 at 3:50 pm

Picked up some SDS.

sentiment

dead hobo Says:
April 16th, 2009 at 3:02 pm

The chart is excellent circumstantial evidence that textbook monetary theory is basically crap. Sentiment powers everything. Even the value of a dollar in a growing ocean of dollars.

Sentiment is powering oil at $50, rather than the much lower price it should be at right now. Copper is being powered by dreams of Chinese hoards mobbing the Chinese economy. Sentiment makes the concept of things getting worse at a slower rate sound like found leprechaun gold. Sentiment makes missing month horrible losses easy to ignore. Sentiment makes banks that got free government money look like cash cows instead of welfare queens that earned a few bucks interest on the free money.

Senntiment is powering the toppiness of the market indexes at this time. People would rather chase dreams than think realistically.

Who is buying right now? Even the average CNBC guest this morning pondered about the coming correction (I started turning it on a couple of hours a week). The employees were mostly rosy. I can’t imagine Joe Retail is back.

dead hobo Says:
April 16th, 2009 at 3:20 pm

S&P +15??? Oh well, been there, done that before. Not again. Must be some kind of short squeeze.

dead hobo Says:
April 16th, 2009 at 5:19 pm

C wouldn’t have foreshadowed good news if it didn’t have something up it’s sleeve, reminiscent of the GS missing month or Wells Fargo accounting tricks. The smart money scurrying to .01 money tells the story.

It’s gratifying to see the upside pressure. The real upturn will happen when anecdotal stories of easy bank credit flow from small and medium business. I haven’t heard any yet. Right now, big banks are too busy making money on trading, accounting gimmicks, and not lending. This adds nothing to the economy.

sentiment

call me ahab Says:
April 16th, 2009 at 5:11 pm

AmenRa Says:

“Google just beat estimates. That should take us through the 875 resistance of the S&P tomorrow. The fuse has been lit.”

the expectation was already there- the market was buying the rumor- my guess is they will be selling the news tomorrow-

leftback has a point on a potential large exit- may happen tomorrow

call me ahab Says:
April 16th, 2009 at 7:49 pm

Thanks leftback . . . I am offically a mental midget . . . since I don’t even know what you just said.

sentiment

Steve Barry Says:
April 16th, 2009 at 7:09 pm

I posted earlier about the problem GOOG would have due to the stronger dollar…ignoring the usual CNBC hype, it apparently happened, as GOOG revenue fell sequentially for the first time in its history. Y/Y, revenue was up a mere 6%. That should warrant no more than a 15 forward P/E on operating earnings…if they make $22 this year, its very fully priced at 350 or so.

Steve Barry Says:
April 16th, 2009 at 7:34 pm

@ahab:

I’m guilty as well…my post above was way too generous…I forgot that that GOOG does not include options expense in their “operating” earnings. I’m too lazy to do all the work, but I know they cash out like mad there…she is probably not even worth close to 350.

leftback Says:
April 16th, 2009 at 3:10 pm

An IPO up 44%? A blow-off rally? What is this, 1999? Where’s Henry Blodget?
Irrational exuberance, my friends…..

There must be an explanation for the rally in the IYR. Short covering would be the most obvious.
Maybe some hedgies are getting cleaned out.

leftback Says:
April 16th, 2009 at 3:23 pm

USD could go to 88 and make a H&S before it falls apart.
Or the pain trade = stay in its channel and make a new high at 92. Ouch.

leftback Says:
April 16th, 2009 at 3:31 pm

Selling more longs. Thank you, Johnny Retail. Up 150% on GMO, 50% on AA.

Can’t help feeling that today’s buyers could have a nasty little rash by Monday’s close.

leftback Says:
April 16th, 2009 at 3:41 pm

Andy, great commentary.
Check this out. The big boys are buying zeros again. It pays to watch all markets. (1 month t-bill 0.08->0.01)

http://zerohedge.blogspot.com/2009/04/one-month-t-bill-at-001.html

We had also noticed the smart money apparently leaving the building this week and have followed.
Something evil this way comes. Sell ‘em.

leftback Says:
April 16th, 2009 at 4:00 pm

Added to modest shorts. There really can’t be much left in this thing, and GE and C are not going to save it.
Today feels like the inverse of March 6. Shorts capitulating everywhere, except Mannwich and Stevo.

Did a lot of liquidating of longs today, taking profits never hurts.

leftback Says:
April 16th, 2009 at 4:37 pm

http://www.calculatedriskblog.com/2009/04/regulators-give-bankunited-20-days-to.html

bankunited (biggest FL bank) receives final notice from FDIC

This one would be quite big for the FDIC to take down. Of course, C would be bigger….

leftback Says:
April 16th, 2009 at 4:53 pm

@Transor Z: Luckily the economy is in recovery, the US consumer is coming back, and all the option ARMs and prime jumbos will turn out to be money good.

(we also have a bridge we would like to sell you…)

Let’s see if C brings out Pandit in a dress tomorrow and calls him “Miss Financial One Stop Supermarket”. Between Pandit and Immelt we are going to see two Masters of Weaselry at work in the morning. (C and GE earning)

Looking at the money scurrying into the short end of the curve this week (yield of 3 month t-bill drop from 0.08 to 0.01), makes me think that something is up. I saw this happen in October and again in January before the selling started. An Indy Mac sized bank failure might make the market sit up and take notice.

leftback Says:
April 16th, 2009 at 6:01 pm

I think a lot of today’s exuberance was about options expiration tomorrow. The day before expiration is often the most interesting day of the week. All bets are off on Monday, or at least this month’s bets are off.

leftback Says:
April 16th, 2009 at 7:38 pm

Help me out here. I had some more thoughts on today’s -and this week’s - trading. What if some hedgie or other large trader had put on a huge option play some time ago? One that looked really good when SPX was 666.79 and was looking like it would be ITM, but then started to degrade rapidly as the market rallied upward in March?

They might have had to desperately buy the SPOOS in an attempt to mitigate enormous losses? I am not an options guy but I have heard about similar idiocy. It’s even better when it is a prop trading desk or IB rogue trader.

leftback Says:
April 16th, 2009 at 8:08 pm

Another technical trader who thinks this rally is about done:
http://online.barrons.com/article/SB123974805332418441.html

ahab: Well, if you had a complex play on - something like a bet that the SPX would be between 600 and 700, for example and then the market rallied far out of that range. Someone else should explain this, like Hoffer.

Today, I start

Document my trading idea and others